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BIG and BIGger – On the Feasibility of a Basic Income

I have described my argument for a Basic Income Guarantee (BIG) as a “pragmatic” one. But a pragmatic proposal ought to be one that actually has some chance of being carried out successfully. And many doubt that the BIG meets even that bare minimum criterion of pragmatism. By what political process is the wholesale replacement of the welfare state with a BIG supposed to take place? How could such a proposal make it unscathed through the sensationalism, log-rolling, and rent-seeking of real-world political processes? And even if it did emerge unscathed, how long would it stay that way before being mutilated beyond all recognition by the plastic-surgery-by-committee of ordinary politics?

Concerns about the feasibility of a BIG seem to take one of two different forms, both of which find forceful and eloquent expression in these essays by Jim Manzi and Tyler Cowen. The first form I’ll call moral feasibility, and it has to do with whether it would really be possible, once we think through all of the details, to implement a BIG in a morally attractive way. The second is what I’ll call simple feasibility, and it refers to whether a proposal such as the one I have articulated for a BIG could be implemented at all in a way that faithfully executes the original idea. In what follows, I will examine each of these forms of feasibility in turn.

Would a Realistic BIG Be Morally Attractive?

My original essay set out four reasons for thinking that a BIG would be superior to the current welfare state from a libertarian perspective. In response, critics have argued that there are three ways in which the actual effects of a BIG might be morally worse: A basic income might reduce the incentive to work; it might grow and develop in unattractive ways due to various political pressures; and it might fail to provide for the special needs of various segments of the population.

Work Disincentives

I’ve discussed the issue of work disincentives already, and argued that both the empirical and moral premises of the argument are overstated. That said, I do find the three kinds of concerns raised by Michael Tanner extremely persuasive. There does seem something fair about requiring those who benefit from society to contribute their share; work is an effective way for families to escape poverty; and even small changes in work output can have large aggregate effects on economic growth – the force which has done more than any government program ever has or will to eliminate poverty in the past, and which still has much vital work to do in the future.

Still, it’s worth remembering that whatever benefits encouraging work might yield cannot be achieved without incurring serious costs, both moral and economic. If state relief is dependent on willingness to work, then the state needs to decide what counts as “work” and what doesn’t. Is watching your grandchildren while their parents work in exchange for a little bit of money a job or a favor? Making – and enforcing – determinations like that requires a degree of state power and discretion of which libertarians are rightly skeptical. And what about people who genuinely can’t work? If we don’t want such people to be cut off from assistance, then now the state must be in the business of making that determination too: who has a “real” medical problem, and who’s just faking it; whether psychological conditions (and which ones) count as genuine excuses for not working; whether that basketball game that inspectors recorded you playing in your front driveway proves you really could go back to work on the construction site, and so on.

Of course, Jim is right that work requirements are popular with American voters, and they have been for a long time. But the trade-off between work and leisure is, like all trade-offs, one that must be made at the margin. And even if we grant the assumption that the balance struck by our current policies worked well for us in the past, that doesn’t entail that it’s right for our current levels of wealth and economic development.

Perhaps libertarians ought to take a lesson from Denmark. Denmark’s generous but relatively efficient social welfare state no doubt plays some role in explaining the fact that Danes work fewer hours per year than workers almost anywhere else in the world. And yet, for all the talk of work’s centrality in a flourishing life, the citizens of Denmark do not seem to be suffering from any existential crisis of meaning. In fact, they’re arguably the happiest people on earth. They are also arguably some of the most economically free people on earth – at least, much freer than us here in the United States, on almost every measure, from respect for property rights to trade and investment. Of course there are complicating factors, and what brief remarks I’ve made here are far from decisive. My point is simply that it’s not as though advocates of a BIG are entirely without evidence for our belief that a little less work, and a little more leisure, would make us better off on net.

A UBI would establish as both a legal and a philosophical concept that every American citizen is entitled to a minimum income - exacted from the taxpayers. Once that “right” is established, the political process will inevitably expand it.

This is a legitimate concern. But it is a valid reason to reject a BIG? On this issue, I can do no better than quote the late, great Milton Friedman, who responded to similar objections to his own Negative Income Tax proposal in the following way:

Clearly the dangers exist. But … they must be evaluated in terms of the world as it is, not in terms of a dream world in which there are no governmental welfare measures. The relevant political question is whether the negative income tax is more susceptible or less susceptible to these dangers than alternative programs of the kind we now have or are likely to get. To this question the answer seems to me clear: The negative income tax is less susceptible.

Why has the present grab-bag of programs been adopted? Because each appeals to a special interest that is willing to fight strongly for it, while few are willing to fight strongly against it; because the disinterested who seek to promote the general interest have been persuaded that every measure will contribute to helping a group that is disadvantaged; because, for many of the measures, there was no clear price tag, and the program could be voted without the simultaneous imposition of taxes to pay for it; because, for still others, there are no direct costs at all - minimum wages are perhaps the clearest example; because, finally, no one who opposed the programs had an effective alternative to offer that would meet the real problems.

Politically, the right solution is to have a comprehensive program whose cost is open and clear.[1]

This, incidentally, is the fundamental problem with Pete Boettke and Adam Martin’s critique of the basic income in their otherwise excellent paper. They are quite right to point out that a BIG would be vulnerable to political opportunism and manipulation. But that’s not what matters. What matters is whether a BIG would be more vulnerable to such forces than our current system, or more vulnerable than other proposed reforms. The relevant baseline is the status quo, not libertarian utopia. And all reforms to that status quo, whether they aim at “privatization” or a basic income, will inevitably be filtered through a political process that special interests will try to manipulate to their own advantage. The question is not which reform is perfectly immune to these forces; the question is which is better able to withstand them. And there is good reason to think that a general, simple, and transparent program like a BIG would be considerably less subject to political manipulation than what we have today.

Special Cases

But concerns about special cases are not merely an opportunity for opportunism. They are often, as Jim Manzi nicely puts it, the result of “healthy intuitions of natural justice that are essential to maintaining a well-functioning political order.” It’s not crazy to think that people with severe disabilities ought to get a bigger helping hand than those who are healthy; to think that those who have supported others through their work and taxes have a better claim than those who have not; to think that special arrangements need to be made to ensure the material security of children, or to enable people to cope with skyrocketing medical costs, and so on.

Precisely because of its general nature, a BIG is ill-suited to deal with these special cases. For progressives who favor a BIG in addition to our vast array of current welfare programs, this is not much of a problem. For them, the BIG merely provides an extra degree of freedom and security above and beyond the more particular needs served by other programs. But for libertarians who seek to replace those welfare programs with a BIG, this is a serious challenge. Will a BIG, all by itself, be enough to meet people’s legitimate needs? Can a BIG really be an effective political compromise between libertarians and progressives if it leaves those needs unmet?

Without in any way minimizing the seriousness of this challenge, I think that libertarians have two good responses available to them to meet it. First, the classical liberal critique of “expediency” as expressed by Hayek, Spencer, and others is fundamentally and importantly correct. A public policy guided solely by considerations of expediency is, at the end of the day, simply not expedient. It’s easier to rouse up excitement about the predictable benefits of a policy than it is to induce caution about its unpredictable costs. And exceptions, waivers, and ad-hoc adjustments that look perfectly reasonable when considered in isolation often add up to systems of policy that no one would wish to defend. Paradoxically, the only way to craft an expedient system of policy is to put considerations of expediency to the side and anchor one’s legal system in a set of clear, simple principles.

Second, while it is easy to think up situations of genuine need that a BIG would fail to address, at some point the basic libertarian response just has to be correct. It is not job of the state – it cannot be the job of the state – to guarantee that no one’s genuine need ever goes unmet. The state can promise a guarantee through legislation, but as my old friend and mentor David Schmidtz pointed out, even the promise of a guarantee is not a guarantee itself. And promises have their costs.

Still, the fact that not all needs can be met by the state does not mean that they must go unmet altogether. Indeed, part of the appeal of a BIG for many libertarians and conservatives will be the space it creates for individuals, families, and communities to help themselves. This is not a call for “atomism” or “rugged individualism.” It is, instead, a call to create the conditions necessary for a vibrant and flourishing civil society in which both self-help and mutual aid can play a greater role in meeting those needs that demand more than the basic minimum provided by a BIG.

Can We Do It?

But all of this is idle talk if a BIG has no realistic prospect of being adopted in any form, no matter how bastardized. And one could certainly be forgiven for thinking that it doesn’t. No major politician in the United States has endorsed the idea. There isn’t any big corporate money behind it. And most ordinary voters still haven’t even heard of the idea. So how could it possibly go anywhere?

It’s a long shot, to be sure. But it’s a long shot that’s made even longer when people who think it’s a genuinely good idea give up on it because they don’t think it has any practical chance of success.

Many libertarians want to abolish the welfare state altogether. Many progressives, on the other hand, would be perfectly happy to see a BIG added on top of our currently existing welfare state. The proposal to replace the welfare state with a BIG might not be anybody’s first-best solution. But that, in a sense, is what makes it promising as a piece of political compromise. A BIG represents a potential overlap between moderate libertarianism and moderate progressivism.

Moreover, from a libertarian perspective, it represents a compromise with the best elements of progressivism. You don’t have to sign on to the problematic belief that inequality per se is a problem to endorse a BIG. A BIG simply tries to ensure that people have enough, not that they have the same. And that, both philosophically and politically, is a far more defensible view. Moreover, a BIG allows libertarians to endorse the admirable progressive goal of a social safety net without the traditional progressive means of achieving that goal through technocratic micromanagement of the economy.

Even still, the wholesale replacement of the welfare state through a constitutional amendment is unlikely to happen anytime soon. And while constitutional decisionmaking behind a “veil of ignorance” has its advantages, there’s something to be said for slow, gradual change informed by experience too. Jim Manzi is on solid ground when he praises the virtues of experimentation.

So if you’re not comfortable replacing the welfare state with a BIG, or if you just don’t think it’s going to happen, what can you do? Well, if we can’t trade the welfare state for a BIG, we can at least make the welfare state – shall we say – BIGger!

Of course, by this I mean “make the welfare state more like a BIG.” As Jesse Walker has recently pointed out, we can do this by cashifying and combining programs. Take programs like food stamps and Section 8 housing vouchers, set common qualifications for them both, and replace the vouchers with cash. That’s not quite the BIG that I proposed. But it’s closer than what we’ve got, and it approximates the pragmatic virtues of a BIG.

Carving out a larger role for cash transfers in the welfare state would shrink the size and administrative cost of government, reduce the intrusiveness and paternalism of the welfare state, and give recipients more dignity and control over their own lives. As an added bonus, it would provide a greater opportunity for us as a society to learn. If you think cash transfers are a bad idea, then let’s start small, see what happens, and go from there. At worst, the experiments fail on a small scale with minimal harm. At best, they work out, and we have a fewmoredatapoints to support the case for a wider, more comprehensive BIG.

Note

[1] This passage is from Milton Friedman, “The Case for a Negative Income Tax: A View from the Right,” reprinted in Karl Widerquist, José Noguera, Yannick Vanderborght, and Jurgen de Wispelaere, eds., Basic Income: An Anthology of Contemporary Research. I am unable to find a copy of the essay online.

Also from this issue

Lead Essay

Matt Zwolinski argues that a basic income guarantee (BIG) could very easily do better than our current welfare state by many different criteria. It would be far more efficient. It would be less subject to rent-seeking. It would be easily accessible by the poor, and its benefits would flow to them rather than to the middle class. Although there are many libertarian objections to a BIG, Zwolinski nonetheless argues that when faced with a choice between a BIG and the status quo, libertarians should be open to making the change.

Response Essays

Michael Huemer argues that while a basic income guarantee might be better than the status quo, this amounts to some rather faint praise. A basic income guarantee would necessarily violate some people’s rights, while a fully legitimate government must never violate anyone’s rights. The problem of political authority will likely remain a barrier to all similar proposals, even if we may happen to find this problem’s full implications troubling.

Jim Manzi doubts that a basic income guarantee would emerge from our political process while still bearing its purportedly beneficial features. Compromises would proliferate, as would paternalistic controls. The interests of the bureaucracy would assert themselves, and the temptation to make exceptions would prove overwhelming to the electorate. Moreover, when a basic income guarantee has been tried in practice, the result has consistently been a withdrawal of participants’ labor. Scaled to an entire society, the result of such a withdrawal may be dire.

Robert H. Frank agrees with Matt Zwolinski that a basic income guarantee would achieve the welfare state’s goals more effectively than our current patchwork of programs. But he argues that a basic income guarantee sufficient to end poverty would spawn massive taxpayer resentment. Incentives to work would be undermined both for recipients and for those whose tax dollars funded them. Frank recommends a combination program that would include a significantly smaller cash grant and a standing offer of public employment for any who desired it. Frank defends taxation against libertarian objections and offers several additional taxes that he believes should be implemented. He argues that these should help pay for the expensive programs here being considered.

Letters to the Editor

The Cato Institute’s Michael D. Tanner examines the Basic Income Guarantee and finds that its simplicity wouldn’t survive the political process. Difficulties abound, arising both from practical politics and from the realities of our current welfare expenditures. Tanner recommends consolidating our welfare system and simplifying it, but he does not endorse a Basic Income Guarantee.

Economist Ed Dolan shares some of his findings on the Basic Income Guarantee. He finds that work disincentives will indeed exist under a BIG, and yet these may be smaller than the work disincentives we already experience owing to the welfare state as it now exists. Libertarians should not be tempted by the so-called “gospel of work,” he says; libertarianism, rather, is about the gospel of freedom of choice.

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